Good analysis of Romney’s tax cut math

Josh Barrow at Bloomberg has a good explanation of why Mitt Romney’s claims about his tax plan don’t hold water.

To review briefly, Romney’s proposal is to cut personal income tax rates by 20 percent, eliminate the Alternative Minimum Tax and the Estate Tax, and reduce corporate tax rates, while at the same time greatly expanding military spending, but he says this will not increase the deficit or reduce the share of taxes paid by high-income people, in part because he’ll reduce or eliminate tax deductions for the rich.

The Tax Policy Center, which Romney himself has previously praised as nonpartisan, looked into this and reported that even if all deductions are eliminated on high-income taxpayers, it would be mathematically impossible to achieve all these objectives at once. The Romney campaign has responded that “six studies” dispute the Tax Policy Center’s analysis, but as Barrow points out, most of the “studies” are actually op-ed articles or blog posts. In fact, as a more recent article at Talking Points Memo explains,

Of the six studies, two are blog posts by the conservative American Enterprise Institute; one is a report by the Republican-friendly Heritage Foundation; one is a paper by Princeton professor and former George W. Bush adviser Harvey Rosen; the fifth and sixth are a paper and Wall Street Journal op-ed by Harvard economist Martin Feldstein, an adviser to the Romney campaign.

In addition, not all the studies appear to reach the same conclusion as Romney. He contends they show that it’s possible to lower tax rates across the board by 20 percent and avoid adding to the deficit by unwinding deductions and credits for high incomes. That’s not the case.

Since Barrow’s piece was written, an analysis by the nonpartisan Joint Committee on Taxation (previously noted here) concluded that eliminating almost all deductions would allow reducing personal income tax rates by only about 4 percent.

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